Written by Lian Jye
Indonesia’s domestic apple production concentrates mainly at Batu, East Java. Due to the over-reliance on chemical fertilisation method, these domestic plantations are facing challenges in declined production. Right now, there is one additional challenge: increase in import quota.
In January 2014, Indonesia has increased its import quota for imported fruits such as apple and oranges. Indonesia is among the top five import destinations for US Washington State apples. In 2012, fresh fruit export accounted for 4 percent of the total US export to Indonesia. U.S. exports of apples have nearly tripled since 2007.
However, US’s apple producers are suffering from “cumbersome” paperwork, said Northwest Horticultural Council executive vice-president Mark Powers. He estimated that apple producers usually suffer two months of revenue loss per year, due to long period of import permit application processes. Each permit usually lasts for six months and application process takes about a month to complete.
The import quota for other agricultural goods are also further liberated in March. Thailand is expected to benefit from the increased import quota as they are considered, alongside India and Philippines, as one of the three major provider of red-onion exports to Indonesia. However, Thailand Foreign Trade Department has urged the exporters to register early with Indonesia to benefit from the increased demand.
Registration procedures for import goods into Indonesia is quite demanding, with a long list of forms and documentations. This concern was echoed by the Department of Agriculture, Fisheries and Forestry of Australia. In addition, the increasing popularity of imported goods, especially beef, has lead to government intervention in foreign trade over the years. Import restriction on foreign beef was introduced in 2012 and 2013 with the aim to push for self sufficiency. The policy has generally failed as the ban has caused the price to skyrocket and the ban was subsequently eased.
However, the agenda to strengthen domestic agricultural industry is always the priority for Indonesian government. Unlike other export-oriented economies in ASEAN, Indonesia’s economy relies strongly on its domestic consumption. The sheer population size of the country is sufficient to generate large demands. Therefore, food security is very important on strategic purposes.
Both Presidential election candidates, Joko Widodo and Prabowo Subianto, focused a huge part of their respective manifestos on agriculture. President-elect, Joko Widodo, took an extra step to further emphasize the importance of agriculture sectors, by linking it to national sovereignty and security. In one of his campaign visits to Tanjungrasa village in Bogor district’s Cariu subdistrict, he explicitly emphasised the reduction of imports of several staple food items such as rice, corn, soy, flour, sugar, salt, beef, onions and fruits. A series of new policies can be expected in the coming months. These include: provision of seed until year 2019, development of basic infrastructures such as roads, dams and irrigation, and land reform.
If the mentioned policies are carried out accordingly, Indonesia should be able to boost its domestic production. However, it would be a challenge in cost-control, as export-oriented countries such as US and Australia tend to have economies of scale and enjoy low marginal costs.
–Edited by Kristine Diaz